Opportunity Zones

OPPORTUNITY ZONES

In December 2017, legislation authored by U.S. Senators Cory A. Booker (D-NJ) and Tim Scott (R-SC) was passed into law after being incorporated into the Tax Cuts and Jobs Act. The “Opportunity Zones Program” is designed to spur economic development and job creation in designated Opportunity Zones.

Opportunity Zones are low-income census tracts nominated by governors and certified by the U.S. Department of the Treasury allowing investors to direct capital into new projects and enterprises in exchange for certain federal capital gains tax advantages.

Governor Phil Murphy worked directly with U.S. Senator Cory Booker’s office, convened meetings and round tables with mayors throughout the State to receive feedback and input, and met with the New Jersey Congressional delegation to ensure a fair and transparent selection process. New Jersey Opportunity Zones are located in 75 municipalities, representing every county. The Opportunity Zone initiative will be housed at the Department of Community Affairs.

OPPORTUNITY FUNDS

Opportunity Funds are private sector investment vehicles that invest at least 90 percent of their capital in Opportunity Zones. Opportunity Funds provide investors the chance to put that capital to work rebuilding the nation’s low-income rural and urban communities.

INVESTMENT INCENTIVES

A temporary tax deferral for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026.

A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.

A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years. (Note: this exclusion applies to the gains accrued from an investment in an Opportunity Fund, not the original gains).

Resources

Opportunity Zone Mapping Tools

Opportunity Zones Brochure

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